Govt pledges 'no more lottery funding for the Olympics'

The government pledged yesterday that no more funding will be diverted from good causes to the 2012 Olympics.

The commitment was made by culture, media and sport secretary James Purnell as MPs voted to transfer £1.1 billion from the National Lottery to the London Olympic project.

This funding includes the £410 million of Lottery money projected in the original games bid - since revealed as a gross underestimate - and the £675 million required to fund the revised budget of £9.3 billion, issued in March last year.

The money will be transferred to the Olympic Lottery Distribution Fund, payable in 15 instalments from February 2009 to August 2012.

Despite concerns from the Conservatives and art groups that the 2012 Olympics are starving arts projects of funding, the government's motion was approved by a majority of 348.

Mr Purnell pledged: "I can confirm today that there will be no further diversions from the lottery to good causes to fund the Olympics."

In a concession to the opposition, the sports secretary said the Conservatives will be able to scrutinise the budget, including cash-flow figures.

Mr Purnell also revealed the Treasury will change the tax regime surrounding the Olympic games, potentially raising £400 million for good causes.

Shadow culture secretary Jeremy Hunt said: "These concessions are important but they do not undo the main damage of this afternoon's measure, which is that it is an extraordinary way to fund a £9.3bn Olympics budget - to cut budgets for grassroots sport, the very budgets that could provide the sporting legacy which was the big promise of 2012."

The government also dismissed claims the downturn in the London property market will see the Olympic project facing a financial black hole.

Olympics minister Tessa Jowell and Ken Livingstone had said money could be repaid by the sale of land and property from the Olympic site, originally estimated at £1.8 billion.

But the London Development Agency has since raised scepticism about the potential growth in land values, projecting assets could be sold for closer to £800 million.

Mr Purnell said the government is still confident land values will increase sufficiently.

"There is no black hole in the Olympic budget," he told MPs.

The House of Lords will debate the London Olympic games tomorrow to discuss how it can be used to benefit local communities and build a "worthwhile legacy".